Bottles of baijiu, the famous fiery national drink of China, are increasingly being spotted in trendy bars and restaurants throughout the Western world.
But despite a spike in popularity for the liquor, which in its home country annually outsells combined global sales of whisky, vodka, gin and tequila, newly converted drinkers are being warned that their next bottle of baijiu might not be what it seems.
That’s because criminals have spotted an opportunity to turn a fast profit by watering down expensive bottles of baijiu, or even substituting the entire contents of your bottle with nasty low-grade, industrial liquor.
For many alcohol enthusiasts, especially those based outside of China, Kweichow Moutai is the biggest name in baijiu. Thanks to government sponsorship, excellent branding and a stellar reputation, Kweichow Moutai Co. Ltd briefly became the largest business on the Chinese stock exchange earlier in 2020.
Despite this, rival distilleries are slowly and steadily making headway into a marketplace previously dominated by Moutai. Take Wuliangye Yibin Co. Ltd as an example. Based in the southwestern province of Sichuan, Wuliangye expanded their business operations in the first quarter of 2020.
The aim of this was to venture an initial financial hit with longer-term progress and profit. It appears that the gamble has paid off. The growth of Wuliangye Yibin Co. Ltd surpassed that of Kweichow Moutai Co. Ltd for the first half of the year.
The biggest impact was on net profits, as Wuliangye are already seeing a return on their investment. Profit has increased to the tune of CNY10.9 billion. That’s roughly £GBP 1.2billion. While this is a slower growth than during the same period in 2019 – 16%, as opposed to 33% – these remain hugely impressive financial results. When we consider that the world has changed irrevocably in 2020, the climb is even more noteworthy.
Baijiu – the fiery national spirit of China – has an unenviable reputation as the most misunderstood alcoholic drink in the Western world. Although a huge seller in its native homeland (where consumption exceeds global sales of whisky, gin, vodka and tequila combined) nobody outside of China seems to really know what it is, how to pronounce it or most importantly how to drink it.
To try and understand this mysterious spirit from the Far East a little better let’s take a look at the top 5 baijiu myths.
1) Baijiu is the name of a Chinese spirit.
Well yes. And no. Baijiu – which literally means ‘white (clear) liquor’ in Mandarin and is pronounced ‘Bye-Joe’ in English – refers to not one but an entire family of distilled Chinese spirits. Baijiu can be divided up into four principle ‘aroma’ styles: strong aroma, light aroma, sauce aroma and rice aroma. These can smell and taste wildly different from one another.
2) Baijiu smells of old socks and tastes like drinking rotting fruit dipped in aftershave.
Celebrated US journalist Dan Rather once likened sipping baijiu to ‘drinking liquid razor blades’. With a hard-hitting alcoholic punch of between 30-65% it’s certainly not a drink for the faint-hearted. Many western drinkers unfamiliar with the umami smells and tastes in a lot of baijiu think it’s like drinking soy sauce and overripe fruit. Other baijiu, like V.I.P Jiu 8, have a much lighter, fresher mouthfeel.
Eric Tsang, is a 67-year-old Hong Kong actor, film director, producer, and television host who landed himself in the soup with reports of him allegedly selling counterfeit baijiu.
Some time back, the actor who is best known for his comedy roles took part in a sales stream, which was hosted on Douyin, a site similar to TikTok. The sales stream is like a Livestream where hosts and celebrity guests come together to endorse products, which the fans can buy during the session.
The Livestream with Tsang went on for around 4.5 hours and managed to get over 10 million viewers. Even though it was the first such sales stream for Eric he managed to sell 22 different types of alcohol, including beer, wine, baijiu, and many more. He also sold snacks, like, crayfish and duck neck, and total sales exceeded 13.5 million yuan (S$2.68 million).
If a business wants to make a splash in the global market, it needs to gain a stranglehold over the stock exchange. Kweichow Moutai Co. Ltd, the distillery behind China’s national spirit, knows that better than most. Having already ousted Diageo from the top of the tree as the world’s most valuable liquor manufacturer in 2017, Kweichow Moutai is now the biggest public company in China.
The popularity of Moutai appears not to have been impacted by Coronavirus, with the share sales increasing by 23% in 2020. This means that Kweichow Moutai Co. Ltd boasts a share value of some £205 billion. For comparison, the biggest bank in the nation – the Industrial and Commercial Bank of China – boasts a share value of ‘only’ £200 billion.
Coronavirus has had a significant impact on countless industries, but hospitality has arguably been hit hardest. Social distancing regulations have led to worldwide shutdowns of bars and hotels, which has naturally had a knock-on effect on the alcohol trade. Baijiu sales overseas were already struggling, and now it appears that India may stop consuming the spirit due to political differences with China.
India does not have a liquor to call their own. While baijiu is as synonymous with China as vodka is with Russia, the Indian market settles for replicating traditional European recipes. These spirits are referred to as Indian-made foreign liquor, aka IMFL. The distributor VBev India, however, brought Jiangxiaobai baijiu into the nation some seven months ago.
Whiskey is by far the most popular spirit in India, accounting for around 75% of liquor sales. Indian nationals were starting to develop a taste for baijiu, however. That’s according to Sumedh Singh Mandla, CEO of VBev India, who described the Chinese spirit as having a tropical taste comparable to pineapple.
It’s no secret that baijiu is big business in China. A successful distillery of this spirit can turn an enormous profit, and if floated on the stock exchange, the prospects are even better. This has not escaped the attention of Dr. Wang Junlin, a master investor that has reversed the fortunes of countless baijiu brands in the Sichuan province.
Dr. Junlin is the majority shareholder of the Sichuan Langjiu Group Co. Ltd, manufacturers of the Langjiu baijiu. Dr. Junlin has a hand in 76.7% of Langjiu’s shares, whether directly or otherwise. Despite parting with some 70 million shares, he remains in possession of 68% of the company.
As a result of the sale of these shares, however, Langjiu is set to be listed on the stock exchange. Other baijiu brands already hold this distinction, including Wuliangye, Shede Wine, Luzhou Laojiao and Shui Jing Fang. The presence of Dr. Junlin in this deal is interesting though, as he is believed to be the wealthiest man in the liquor industry. Dr. Junlin’s personal net worth is believed to top £1.5 billion.
Dr. Junlin enjoys a stellar reputation in the realm of Sichuan wine. Born in Renshou in 1967, Dr. Junlin studied at the Southwestern Medical University (then known as Luzhou Medical College) to earn his medical degree. In the early 1990s, Dr. Junlin also held the position of director of Chengdu Enwei Group Research Institute.
In 1992, Dr. Junlin took on a new career path. He began work at the Pharmaceutical Factory, an enterprise owned by the Luzhou state, as a Director. The factory was struggling financially at the time, with an annual income of just £220,000. Dr. Junlin oversaw privatisation that ensured this income rose to a staggering £50 million.
Baijiu is a source of cultural fascination in China, and distilleries are hoping to replicate this overseas. Cheng International, one of the biggest distributors and importers of baijiu, are taking this ball and running with it. As of July 2020, a four-part online masterclass aimed at the British alcohol trade will unfold over Zoom.
The course will be led by Qiqi Chen, the Managing Director of Cheng International, and the aim is simple. Chen is looking to educate western audiences about baijiu. This includes the baijiu production process, the history of baijiu, and its importance to Chinese culture – both contemporary and ancient.
Naturally, there is also a sales element at play. The masterclass is designed to show that baijiu can be a big seller within the European spirit trade. Lessons on concocting the perfect baijiu cocktail will also be provided, as will insights into pairing baijiu with the perfect meal. Samples will also be provided at a cost, of which £5 of every sale will be donated to The Drinks Trust.
If you are a part of the alcohol industry in the UK and would like to attend this masterclass, the first session is free for the initial 100 sign-ups. Point your browser to www.bomci.chengintl.co.uk to reserve your place. If you’re unavailable, don’t worry too much. You’ll find everything you could ever wish to know right here on www.baijiublog.com too.
Issues with lorries and heavy goods vehicles on the motorway are no fun at all, often leading to lengthy traffic jams and delays. Spare a thought for the driver that spilt hundreds of boxes of Moutai from his delivery in Shanghai. Not only is this city famously busy, but his cargo was truly precious.
It appears that the driver was attempting a U-turn in the Changning District, one of the most populous parts of Shanghai. In doing so, the side of the truck opened. Over a thousand crates of Moutai proceeded to tumble into the road.
So far, so unfortunate. Accidents happen. Sadly, the driver’s production line is unlikely to be quite so understanding. When we consider that the average bottle of Moutai retails for around £100, that potentially is six figures of lost revenue spilt on the streets of Shanghai. Throw in the prestige of this spirit and you have a recipe for a storm.
Chinese liquor giant Kweichow Moutai Co plans to expand into the health tonic liquor market by partnering with Xiuzheng Pharmaceutical Group. The two companies have signed a strategic partnership agreement to start cooperation production and sale of the liquor. The two companies also plan to set up a joint venture.
Moutai Chairman Yuan Renguo said health tonic liquor was a major new business of the company during the 13th Five-Year Plan (2016-20), in response to surging demand for health-related products.